Big Board Ponders Pay Disclosures

By LANDON THOMAS Jr.

Published: October 10, 2003

John S. Reed, the interim chairman of the New York Stock Exchange, spent much of yesterday poring over the details of the compensation arrangements of the exchange's executives to make sure the extent of their pay is disclosed correctly.

The careful deliberations by Mr. Reed before publicizing the accumulated pay and benefits of two deputies of Richard A. Grasso, Mr. Reed's predecessor as chairman, underscore how delicate the issue of compensation remains after Mr. Grasso's resignation.

The deputies are Catherine R. Kinney and Robert G. Britz. Mr. Reed has indicated for a week that the disclosure is coming, and has acknowledged that there will be criticism of their packages, so he may be evaluating an appropriate response to that as well.

The exchange is expected to disclose the pay of Mr. Britz and Ms. Kinney, co-presidents, and of several other executives' today.

Meanwhile, the search committee charged with finding a permanent chairman and chief executive for the exchange will meet today and is expected to select an executive search firm to lead the process. The committee is chaired by Laurence D. Fink, the chief executive of Blackrock, an investment firm based in New York. Heidrick & Struggles, Russell Reynolds and Spencer Stuart are among the firms that have made presentations to the board.

In another development, Herbert M. Allison Jr., the chief executive of TIAA-CREF, was named the chairman of the board's compensation committee, succeeding H. Carl McCall, who resigned from the board last month.

Stock exchange officials said yesterday that Mr. Reed was determined to disclose the pay packages of the top executives but that he wanted to take extra time to see that the final numbers were correct and conclusive.

At a meeting with stock exchange members on Tuesday, according to someone in attendance, Mr. Reed said that he also wanted to give Mr. Britz and Ms. Kinney time to prepare their families for the firestorm that would surely ensue.

The annual pay of Mr. Britz and Ms. Kinney has already been disclosed. They each received bonuses and salaries that exceeded $2 million in 2002 and 2001, according to documents submitted to regulators. Their accumulated packages, including deferred savings and retirement benefits are said to approach $30 million for each, reflecting their decades of service.

The accumulated packages of other exchange officials are considerably smaller, said one director yesterday, ranging from $1 million to just under $10 million.

Just as Mr. Grasso's accumulated pay of $139.5 million sparked outrage within the exchange and out, it is the savings that Mr. Grasso's favored deputies have amassed over their 30 years of service that angers some Big Board members who describe it as one more sign of how the exchange's top officials enriched themselves at the membership's expense.

''This is a not-for-profit private company; these guys work for the owners,'' said Patrick Collins, a stock exchange seat holder. ''Guys are struggling on the floor, at risk all the time, to make $400,000. Who makes those salaries? Greed is not good, greed is a sin.''

Mr. Reed's mantra since taking over the exchange has been full disclosure, but he wants to avoid the mistake that the board made when it disclosed Mr. Grasso's $139.5 million package, only to discover soon after that Mr. Grasso was due $48 million more under his contract. Mr. Reed has not been shy in faulting the board for the fiasco over Mr. Grasso's pay. Some exchange members said yesterday that the fury over compensation was dying down.

''The day that someone on Wall Street expresses outrage over pay must mean the apocalypse is around the corner,'' said Leo Guzman, the chief executive of Guzman & Company, a member firm. ''Among other member firms, I just don't see this kind of outrage.''

Mr. Britz and Ms. Kinney had been charter members of Mr. Grasso's inner circle long before Mr. Grasso's appointment as chairman in 1995. They are lifers, who like Mr. Grasso, have never worked anywhere other than the exchange. Mr. Britz, 52, joined in 1974, fresh out of Manhattan College, and has spent much of his time in marketing areas, with a focus on attracting new companies to list on the exchange.

Ms. Kinney, who is 52 and a graduate of Iona, began work at the Big Board in 1974. Her area of expertise has been floor operations. In many respects they have worked as joint operations chiefs since 1995.

In 2002, they were promoted to their current titles, co-presidents, chief operating officers and executive vice chairmen, joining the board for the first time.

Other members of this circle included Frank Z. Ashen, the former head of human resources and security at the exchange, and William R. Johnston, a former president of the exchange who remains on the payroll as a senior adviser to the chairman.

Mr. Ashen, who joined the exchange in 1977, is widely known as the one person at the exchange who knew the details of Mr. Grasso's compensation from the beginning and according to board room minutes has been a participant in compensation committee meetings dating back to 1998. Mr. Johnston, who became a member in 1964, was president of the exchange from 1996 to 2002.

Photo: John S. Reed, the interim chairman of the New York Stock Exchange, is expected to reveal the pay packages of his predecessor's deputies today. (Photo by Ting-Li Wang/The New York Times)